Would like advice about a car purchase..

[heygirl]

What is the name of your state (only U.S. law)? Texas


We've been looking for a used vehicle to purchase, and found one. This would be the first time we'd buy from a private seller, so we were already a little leary about it to begin with, and now, we're just not sure. Here is the scoop.

We have an appointment to have the vehicle inspected by a mechanic, and will also run carfax on it. Assuming those turn out fine, here is the process the seller wants us to take:

He want us to wire money to his bank to pay off a loan for which this vehicle is collateral. According to the seller, it is not a car note, but the bank has the title to this vehicle. After the loan is paid, the bank will send him his title, and he will then turn it over to us.

We're very uncomfortable here, but we want the car... Just don't want to get taken to the cleaners, so would really love your analysis of the situation and advice on how to handle this to protect ourselves.

Hoping for some awesome responses.... and thanks in advance!

 

[justalayman]

it's definitely a risk. It would be possible for you to send money and the seller never sign the title to you. Unless the seller willingly returned your money, you would be relegated to suing and then trying to collect on the judgment.


If it were me, I would have him contact the bank and set up a time to come in and have you pay them (with any remainder of the selling price going to the seller of course) and they could simply have the guy sign off on the title, the bank signs off on the lien and they hand it to you.


Too many horror stories to trust a stranger.

 

[heygirl]

Thanks for the response! I appreciate it.



I believe the bank is out of state, so I don't think that's a consideration. Any other suggestions?

I've been thinking about making this work, so I have other questions:

Does physical possession of the car help? If we asked the seller to give us the keys to the car and allowed us to drive it home, would that do anything to protect us? Probably not, but just asking...

What about something like this?

If I go to my bank, and have them wire the money, is there a way to sort of put the money in "escrow" until we receive the title? Then, the money can be released to the seller's bank. If something happens, and the title is not signed over to us within X amount of days, can the wire be reversed and the whole thing canceled?



Also, aside from the title, is the bill of sale all we would need from the seller?

.

 

[CourtClerk]

Have you contacted the bank to see what they can do for you to accommodate the transfer of the title?

Perhaps you send the money directly to them in one way or another. I mean, I've traded in cars that still had liens on them to dealers, there must be a way to do it because once they paid off the car, I never saw the title to the car I no longer owned...

 

[justalayman]

This is the perfect example of where an escrow company would be helpful. Personally I think there should be escrow companies on every corner to deal with things just like this.

maybe ask your bank if they have the ability to act as an escrow agency. Not sure if they would or even could but if not, maybe they have some ideas to protect your situation.

very little removes the situation where the seller simply didn't deliver the title to you. While possession of the vehicle and a contract with receipts signed by all would help, if he really wants to screw you over, there are ways and your only recourse is to sue him and try to collect on a judgment.

Some states allow equitable awards in small claims court which means a court could order he sign the title to you but most deal only with money and as such, you would win a judgment for money. You would then have to try to get payment for that.


Yes, I am a bit paranoid. This deal may go perfectly well.

Also, aside from the title, is the bill of sale all we would need from the seller?

a basic contract that mentions the actions being taken. Kind of an outline of how the deal is to be completed so if there are any questions later, there are no questions.

 

[heygirl]

Have you contacted the bank to see what they can do for you to accommodate the transfer of the title?

Perhaps you send the money directly to them in one way or another. I mean, I've traded in cars that still had liens on them to dealers, there must be a way to do it because once they paid off the car, I never saw the title to the car I no longer owned...

Thank you.

I know that there's a process for this, and like you, we've gone through them with dealerships. The thing that concerns me is the fact that we'd be dealing with a private party, and so, I'm thinking that the likelihood of a scam might be higher.

My husband thought about contacting the bank, but I'm sure they're closed until Monday. I am not sure though if they would even speak to us. Aren't those things private?

I also don't know what forms of documentation I should ask from the seller.

 

[heygirl]

This is the perfect example of where an escrow company would be helpful. Personally I think there should be escrow companies on every corner to deal with things just like this.

maybe ask your bank if they have the ability to act as an escrow agency. Not sure if they would or even could but if not, maybe they have some ideas to protect your situation.

very little removes the situation where the seller simply didn't deliver the title to you. While possession of the vehicle and a contract with receipts signed by all would help, if he really wants to screw you over, there are ways and your only recourse is to sue him and try to collect on a judgment.

Some states allow equitable awards in small claims court which means a court could order he sign the title to you but most deal only with money and as such, you would win a judgment for money. You would then have to try to get payment for that.


Yes, I am a bit paranoid. This deal may go perfectly well.


a basic contract that mentions the actions being taken. Kind of an outline of how the deal is to be completed so if there are any questions later, there are no questions.

I guess my first step should be to try to contact the banks (his and mine) to see if we can work something out. If we could bypass the seller, and have the title sent directly to me or to my bank, that would be good too. Maybe if the seller signed something to that effect and instructed his bank to do so upon payment of the loan... Hmmm.. This sounds like it might work. I just hope the banks are willing to help.

Thanks again!

 

[CourtClerk]

Thank you.

I know that there's a process for this, and like you, we've gone through them with dealerships. The thing that concerns me is the fact that we'd be dealing with a private party, and so, I'm thinking that the likelihood of a scam might be higher.

My husband thought about contacting the bank, but I'm sure they're closed until Monday. I am not sure though if they would even speak to us. Aren't those things private?

I also don't know what forms of documentation I should ask from the seller.

I'm sure they wouldn't give you specific information about the account, but ask in generalities...

escrow is of course, your other option.

 

[heygirl]

I'm sure they wouldn't give you specific information about the account, but ask in generalities...

escrow is of course, your other option.

Well, hubby wants to verify the seller's story. He wants to verify if the account we'd be wiring the money to is in the seller's name. He wants to verify that they have the title and will release it upon payment of the loan. He wants to verify the amount of the loan, and that the amount we agree upon is sufficient to pay off the loan. I mean, what if we pay $10K but the seller owes more???

He has questions, lol.

Would those questions be too specific??

 

[swalsh411]

This just screams "scam" to me, especially the part about wanting the money wired.

What is so great about this car that it's worth the risk?

 

[Gela]

I worked for a bank 20 years ago, and back then the debtor was allowed to instruct the bank where to send the title upon paying off a loan. It was pretty common practice in our office.

I no longer work in banking, and I'm not an expert in the field, but the scenario described does not sound like a scam to me. That is, provided you're able to confirm in advance that the title will be released to you. Also, I understand the bank holding the title even though the loan isn't a carnote. He owned the car free and clear when he took out the loan, and he used it for collateral. Must have been a short-term loan since the bank didn't bother to re-title it.

Who gets to drive the car while the banks are hashing all of this out? Buyer or seller?

 

[cyjeff]

It is probably also worth a call to the bank to find out if the amount you are going to pay will pay off the lien.

 

[heygirl]

This just screams "scam" to me, especially the part about wanting the money wired.

What is so great about this car that it's worth the risk?

Well, it's just a nice vehicle that's priced well. He's not happy with what the dealership is giving him, so he'd rather sell this way than trade it in. He gets a little more this way, and the buyer saves some as well.

I don't think it's "too good to be true", but it IS a good deal --- assuming it's all on the up and up, of course!


I don't know if it's a scam, but it did raise some red flags...


.

 

[heygirl]

I worked for a bank 20 years ago, and back then the debtor was allowed to instruct the bank where to send the title upon paying off a loan. It was pretty common practice in our office.

I no longer work in banking, and I'm not an expert in the field, but the scenario described does not sound like a scam to me. That is, provided you're able to confirm in advance that the title will be released to you. Also, I understand the bank holding the title even though the loan isn't a carnote. He owned the car free and clear when he took out the loan, and he used it for collateral. Must have been a short-term loan since the bank didn't bother to re-title it.

Who gets to drive the car while the banks are hashing all of this out? Buyer or seller?

Well, this did come up... The seller wants the title sent to him, and he will turn the title and the vehicle to us at the county office (that handles vehicle titles and transfers) because until the vehicle is signed over to us, he is legally responsible for it.

So, we wire the money, he keeps the vehicle, and he gets the title....

Just really leaves us assuming all the risk, while he is protecting his precious butt...... again, assuming it's not a scam.

 

[heygirl]

It is probably also worth a call to the bank to find out if the amount you are going to pay will pay off the lien.

In response to some of our questions, the seller said he requested a pay-off letter (or something like that) which will disclose the amount required to pay off the lien. Of course, should we decide to follow through, we would want to verify this amount ourselves before we wire the money.